Licensing: Advertising and Collateral use of all images captured, in perpetuity

Shoot Days: 1

Photographer: Up-and-coming portrait photographer

Agency: Mid-sized, based in NYC

Client: Pharmaceutical manufacturer

Here’s the estimate:

Budget: Usually when I’m quoting on a job, I ask the art buyer if they’ve established a budget for the project. Not that I don’t know what things should cost, but if a client already knows how much money they have to spend, it allows me to concentrate on figuring out how to make the shoot work for that price rather than also trying to figure out what level of production they’re looking for. While the creative fee for the photographer will largely be determined by the usage, the production costs could be any amount of money. In this case, the client told me upfront that they had budgeted $40k for photography. My initial impression was that it would be a little tight, but workable. They wanted to do eight individual portraits of professional talent on a simple background in a studio. After talking with the photographer and considering hair, makeup and wardrobe, and how much time we’d want with each subject, we decided we’d need two shoot days. But when I ran the numbers in my head, I was having trouble meeting that budget. So I proposed to the art buyer that we trim the number of subjects to six so we could do it in one day, which would save a lot on licensing fees, model fees and the other production costs. Luckily, since were we dealing with an experienced art buyer and an educated client, they recognized that as a reasonable trade-off. However, just a few days prior to the shoot, the client asked us to also quote the cost of adding back the two additional models and the second shoot day. After running the numbers on paper, It turned out that it would have increased the cost by about 50 percent, so they decided not to go that route.

Creative/Licensing: The pictures were intended for use on the company’s website, not to promote a specific drug, but rather to promote awareness of a particular illness, to educate the public and to encourage healthy living as a form of treatment. As altruistic as that sounds, ultimately, if a “patient” required medical treatment, the idea was that they would choose the pharmaceutical manufactured by the client. There’s no question that the usage was advertising, but the nature of that use was somewhat of a mitigating factor (in other words, mild downward pressure on the value). The client type (big pharma company) and their need for perpetual use of all images captured definitely pushed the value up. Sometimes clients want a license to use all the pictures captured rather than a limited number of selects. I’m always going to assign a premium to that compared to if the client just needed licensing for one image of each person (which was what they were likely to actually use). But since all the other pictures would be subtle variations on the first six, I was basically quoting on six images and only assigned a small premium for that additional licensing.

After “value engineering” the quote as much as possible, we landed on a creative/licensing fee of $12k and about $30k in production expenses. This exceeded the budget slightly, but because the agency wanted to include a second casting day and talent payroll service, which were both “luxuries” as far as we were concerned, and could have been eliminated, they agreed to cover those additional costs, and the estimate was approved.

Assistants: We only needed two assistants since there wasn’t much variation in lighting setups from one talent to the next.

Digital Tech: $500.00 covered the tech’s day rate. The photographer and tech were both OK working with the photographer’s laptop as opposed to renting a workstation/cart. That saved us quite a bit on the rentals side, since the typical cost for a workstation is about $700.00 – $1000.00.

Equipment: We discussed necessary file size with the agency and since they had no intention of producing big transit ads, we agreed that a medium format camera system would be overkill, which helped keep out equipment budget down. We ended up quoting for a few Profoto 7b kits, modifiers, soft boxes and stands, a DSLR camera system (the photographer would use their own as a backup), a handful of lenses and miscellaneous grip.

Producer: A producer is necessary on just about any advertising job. Whenever a photographer needs to manage more than their immediate crew, it’s a good idea to have a producer on hand. A photographer should focus on the creative and leave the talent, location, client, stylist, catering, parking and schedule concerns to the producer.

Studio Rental: This shoot was in a smaller market so there weren’t that many options available on the studio front. Luckily, the pick of the litter was open on the desired shoot date, so we quoted it at cost in our estimate and put a hold on the day.

Photographer Production Day, Casting and Talent: Since we needed talent capable of conveying very subtle emotion, rather than simply looking good on camera, it was important to hold a live casting (as opposed to simply casting from comp cards or online galleries). We included two pre-production days for the photographer to attend the casting to get a better sense for how each potential subject took direction. The agency set the talent rates, which were a bit leaner than we are usually comfortable with, so we were sure to let them know that the lesser rate would almost certainly limit the talent pool. We also mitigated it by putting together a schedule that minimized talent time on site. As it turned out, the pool seemed a bit light, but it was chock full of great options for us. It’s not unusual to use a separate payroll service to pay talent (and sometimes even crew). They also asked us to include an additional fee to cover the costs of paying the talent through a payroll service. Different states have different laws about when and how different types of workers get paid and what taxes and insurance are added to or deducted from those payments. So sometimes a client just wants the peace of mind of knowing that those obligations are being met and they won’t be hit with any unpleasant surprises later. So in addition to the 20% model agency fee, we paid a 25% premium to the payroll service.

Styling: The agency wanted a natural look. We brought on a sizable team to help keep us on schedule and included $250.00/talent for wardrobe.

Post Processing and Transfer: The agency would be handling all retouching, so we included a day for the photographer to do a quick pass on each select and adjust color, contrast, etc. Anything beyond raw adjustments would be the responsibility of the agency.

Catering and Misc: Even though we were running a pretty lean production, the catering budget was healthy, since catering really impacts the perception of a production. We also included $300.00 to cover parking, mileage and any other miscellaneous expenses that might pop up on the shoot or casting days.

If you have any questions, or if you need help estimating or producing a project, please give us a call at (610) 260-0200. We’re available to help with any and all pricing and negotiating needs—from small stock sales to big ad campaigns.

Wonderful Machine

Hi Jess,
Thank you for this article series, which I find always interesting.
As a producer in NYC, I am now faced with having to pay crew through a payroll company. In the eye of the IRS, there’s no such thing as a “free-lancer”: you’re either an independent contractor (which is the case for stylists as they have autonomy on how they handle their assignment and have often a business presence like a website and list of clients), or an employee (where you do as you’re told, do not incur any financial risk when performing your assignments etc.). Assistants are then considered “employee” and photographers, producers, reps who pay them as 1099ers can face an audit for unpaid unemployment taxes. (of course, we all know that the biggest hurdle will be to convince clients to pay more to cover payroll taxes!)
I would love to hear your thoughts on this. What has been your experience?

Great question, Aurelie. We’re seeing a bit of this buzzing around in the industry lately. Taxes and insurance are pretty tricky territory that we leave to our business manager and accountant to sort out. The best answer I can give is to consult an accountant to determine when to withhold (and/or mark up to account for) necessary taxes and insurance. The worst answer I can give is that my admittedly unqualified reading of the the available IRS documents on the matter lead me to believe that under normal circumstances, most, if not all, of a given crew would be considered independent contractors. Assistants may be the most questionable, but since they are typically actively promoting themselves within the market, free to accept/reject work, and can realize a profit or loss, I would think the facts point overwhelmingly to independent contractor. But don’t take my word for it. I’m not at expert on the matter. Consult your accountant or check out http://www.irs.gov/pub/irs-pdf/p15a.pdf and http://www.irs.gov/pub/irs-pdf/p15.pdf. Can’t stress this enough – I’m not expert – this is just my opinion after reading through some of the available info on the matter.

Jordan

I am a photographer in NYC and am currently being audited by the NYC Dept of Labor. They requested paperwork for every person that I have hired for the past 3 years. I have always paid assistants and crew as independent contractors, but the Dept of Labor determined that many of the people I have hired should be classified as employees — even some assistants that I only hired once is considered an employee.

Within the first 5 minutes of the audit, the auditor told me that an assistant of any kind will most likely be considered an employee.

The auditor also said that anyone who is paid OT or is reimbursed for expenses is automatically considered an employee. I spoke to a lawyer in this field and she told me this is not true. They researched every individual to find out if they are advertising their services (a sign of an independent contractor).

I am in the process of appealing their results, so I’m not sure how this will end up.

Crew are most definitely not considered independent contractors. If you tell then what time to arrive, what time to leave, what time to eat lunch, and what to do, they are NOT independent contractors. If they are using your gear, they are not independent contractors.

We all need to consider paying everyone through a payroll service and adding a 20% markup (minimum) to cover this added expense. This is NOT an area to be competitive in. Protect yourself AND your clients, because the IRS and states are coming a-knocking on this subject.

I absolutely love and appreciate these posts; transparency in this industry, especially for comparisons across markets, is immensely valuable.

Could you create a post sometime that breaks down your typical “creative/license fees”? In most of your Pricing & Negotiating posts, they make up a large percentage of the contracts, and I’m curious how that money is distributed.

All of the combined creative and licensing fees go to the photographer. They are determined based on a number of factors – time, complexity, uniqueness, client, and licensing. Generally, we’re not tying the photo fees to the rest of the production in any way. We have noticed a peculiar trend, though. Without trying to do so, we frequently find that the fees and expenses split a given estimate’s bottom line at about 50/50. It didn’t happen in this case, but we do see it often enough to notice.

Thanks! I just quoted 3 restaurants to do a large job. I’m still waiting on them, I made suggestions to help them break down the menus for shooting(they wanted everything). Turns out they didn’t quite realize how big a job this was going to be and how $$$$ the photography is going to be. smh

I love this discussion. Thanks so much for posting. I recently bid on a job much like the one in question. Through an AD agency, the pharma client had 40K to spend to shoot 24 employees (no talent fees) on white over 12 hours in one day (so there was overtime). They wanted unlimited/ unlimited too. My estimate came in a bit under 50K with 5 years usage, which the agency agreed in the bidding process was really all they needed. I lost the bid to quite established photographer (more established than me by a long shot) who came in at 40K with the unlimited usage.

I’m not coming in on either side of the argument… just sharing that this is a really complicated issue. I’ve worked on many estimates with Jess Dudley and I can honestly say, he has great knowledge of the market and estimating.